A recent survey by J.D. Power indicates that Canadians are now spending, on average, $11 less on their monthly primary credit card use compared to a year ago. The survey polled 6,478 respondents that use credit cards, who were found to spend an average of $1,144 per month. When looking at spending over the last five years, the monthly spend using credit cards was found to have declined by $23.
Overall spending in terms of cash, debit and other non-credit card-related spending was found to have however risen by 51% during this past year. Despite the slight decline in credit card use, the survey found that Canadians are still satisfied with their use of credit cards, registering a 764 on a 1,000-point scale. However, some people were opting to use alternative means of payment for larger purchases.
Buy now, pay later services and personal or instalment loans were found to be viable alternative considerations for 36% of respondents. Personal loans were the most popular alternative with 21% considering it for large purchases, while buy now pay later services trailed in second place with 17% popularity. Affordable fees and competitive interest rates were found to be driving forces behind this consideration.
Interestingly, despite buy now, pay later services often coming with very low or no interest rates, the uptake of this credit remained low. Another study conducted by GetApp Canada found over a third of respondents believed there needed to be regulations governing these providers, with spending limits and security measures being the top concerns for borrowers.
Managing director of payments at J.D. Power, John Cabell, said that though satisfaction with credit cards amongst Canadians had been steady over the years, the growing competition from alternative lending providers should be noteworthy for credit card issuers. He emphasised a need for credit card companies to do more to retain their customers as recession predictions emerge.
The survey also found that 54% of credit card users could be classified as financially unhealthy, with 24% of respondents affirming that they were financially worse off in 2022 than they were a year ago. This is up from 16% who considered themselves financially worse off in 2021 compared to the year before.
27% of respondents also felt confident they understood their credit card features and benefits. A decline in satisfaction with rewards was also noted amongst cashback customers. The survey found that consumers needed to re-evaluate their current credit card choices to ensure that there was better alignment between their spending and the rewards and benefits their credit cards offered them.
Contact Accountancy Insurance
We would love to hear from you.
About Accountancy Insurance
Thousands of accounting firms offer our tax audit insurance solution, Audit Shield to their clients. Find out why.